European manufacturing industries are bracing for an exceptionally challenging winter as natural gas prices have surged dramatically over the past two months, driven by escalating military conflict between the US and Iran. British wholesale gas prices reached 205 pence per therm this week, representing a 101% increase since June and marking the highest level since Russia’s invasion of Ukraine in 2022. The price spike has been precipitated by Iranian attacks on ships in the Persian Gulf and disruptions to the Strait of Hormuz, a critical chokepoint through which approximately one-fifth of global oil and gas flows.
The energy crisis is creating substantial strain on industrial operations across the continent. Bridgnorth Aluminium, a rolled aluminium manufacturer in England employing 370 workers, currently spends approximately £1.1 million monthly on combined gas and electricity costs—representing 18% of total operating expenses and rising. The company is exploring options such as extended holiday shutdowns and accelerated maintenance schedules to minimize operations during peak pricing periods. Meanwhile, forecasts from the Item Club predicted earlier this year that Britain alone could lose 163,000 jobs in 2026 as a consequence of the conflict, with manufacturing-heavy regions particularly vulnerable.
Storage shortages are compounding price pressures heading into the colder months. Europe’s gas reserves stand at approximately 67% capacity, well below the seasonal average of 80%. Germany, which maintains Europe’s largest storage capacity, is only approximately 50% full and is tracking to miss its official 70% storage target this year. The Netherlands similarly faces challenges meeting its 80% target. The United Kingdom, which imports roughly 70% of its gas and maintains some of Europe’s lowest domestic storage capacity, faces particular exposure to supply volatility.
Medium-sized manufacturers across Europe’s industrial sectors are warning that elevated energy costs threaten business viability without government intervention. Trade associations representing steel, chemicals, and automotive industries have called for urgent action from political leaders, noting that energy-intensive producers cannot absorb these additional expenses while competing internationally. Eurometal has cautioned that European manufacturing job losses could reach 300,000 by year’s end, driven by both energy costs and Chinese competition. The chemicals sector faces compounded challenges, as energy serves not only as a power source but also as essential feedstock, meaning price increases impact production twice over.
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